Managing Expansion, Obstacles, and Environmental Responsibility in the Tank Container Sector

Logistics Transportation Review | Friday, December 22, 2023

The tank container sector, a pivotal entity in the global logistics domain, has witnessed unprecedented expansion in recent years due to the growing need for transporting bulk liquids and liquefied gases.

As of January 1, 2023, the global tank container fleet has reached an impressive count of 801,800 units, marking a substantial rise from the 737,935 units reported on January 1, 2022. Notably, the production of 67,865 new tank containers in 2022, signifying an increase of 14,580 units compared to the previous year, has resulted in an 8.65 percent growth in the global tank container fleet for 2022, surpassing the 7.3 percent growth observed in 2021.

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The surge in production and fleet expansion can be attributed, at least in part, to challenges posed by the

 

global Covid-19 pandemic. Supply chain disruptions created a shortage of tank containers, prompting heightened demand from operators and Beneficial Cargo Owners (BCOs). This shortage led to a record-setting year for tank manufacturers, leasing companies, and operators in 2022.

A noteworthy trend during this period was the refurbishment and reintroduction into service of older tank containers instead of retiring them. This adaptive strategy, driven by supply chain uncertainties and equipment needs, underscores the industry's resilience.

However, a potential challenge looms on the horizon. The substantial growth in the global tank container fleet may result in an oversupply of equipment in the upcoming year, echoing patterns observed in previous global recessions and highlighting the cyclical nature of the industry.

The tank container's pivotal role in the "just-in-time" business philosophy has become increasingly indispensable for major end-users, the shippers. The disruptions in the supply chain over the past three years showcased the tank container's ability to play a critical role in ensuring the timely delivery of goods. Chemical companies, in particular, held a significant number of tank containers on demurrage on a "just-in-case" basis, contributing significantly to the industry's growth.

As the demand for new tanks surged, the global tank container fleet experienced unprecedented growth in 2022. The report notes that 2022 witnessed the highest-ever figure in terms of new production. The top 10 tank container operators and leasing companies continue to dominate the industry, commanding over 49 percent and 83 percent of the global fleet, respectively.

The industry's growth has also attracted smaller players entering the market, offering niche tank services in specific regions such as Southeast Asia. Existing operators reported a shift in shippers' behavior, emphasizing the importance of relationships over the erratic spot market and online price-focused competitive bidding.

Regarding the disposal of older tanks, one facet is gaining increased attention. Tanks built over 20 years ago are approaching the end of their operational lives. There is a shift in the disposal trend, with older, smaller capacity tanks being repaired and reintroduced into service due to the high demand for equipment. This trend is likely to persist if the price of new tanks remains at elevated levels.

In addition to growth, the International Tank Container Organisation (ITCO) is playing a significant role in promoting safety, efficiency, and sustainability in the industry. Over its 25-year history, ITCO has been a leading advocate for the use of tank containers in the transport and short-term storage of bulk liquids and gases.

Safety remains a paramount focus for ITCO, with initiatives aimed at introducing and maintaining safety standards. The organization actively works to integrate tank container education into the curriculum of transport universities and colleges, inspiring the next generation to consider a career in the tank container industry.

The industry's commitment to environmental sustainability is also on the rise. ITCO recognizes the increasing demand for environmental best practices in transport service providers and emphasizes the tank container's inherent sustainability as a key asset for industry growth. The organization has addressed environmental concerns, such as the proposed ban on Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS), through comprehensive guidance documents.

Efficiency and digitization are also key focus areas for the industry. ITCO has established an Efficiency group to create industry standards as part of the digitization process. Projects within this scope include the development of standards for tank container load movement milestones across deep-sea routes, with the goal of enhancing visibility and track-trace capabilities.

As the tank container industry navigates the complexities of a dynamic global market, it continues to evolve, adapt, and play a crucial role in meeting the demands of a rapidly changing logistics landscape.

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